Lawsuit Regarding the London Gold Fixing

Wed, Mar 5, 2014 - 11:54pm

A class action lawsuit was filed on March 4, 2104 in the US District Court, Southern District of New York, Manhattan. The caption is Maher v. Bank of Nova Scotia, 14-cv-01459, U.S. District Court, Southern District of New York (Manhattan).

The articles can be found on a google search, see here, for example.

I went to the pacer site and pulled the complaint. I breezed through it quickly.

At this point, I am pretty far from impressed. In fact, I am much closer to WTF?

The lawsuit has a single class rep who bought some futures on the Comex. The legal theory is straight antitrust, based primarily on the claim that the LBMA's twice a day price fix is somehow a violation of the Sherman Antitrust Act and the Clayton Act ("contract, combination or conspiracy on restraint of trade"). The sole facts plead consist of empirical evidence of price moves, hardly persuasive, along with a recounting of the manner in which the five bankers set the fix. Again, this is hardly going to keep this case in Federal Court and I expect a timely 12(b)(6) motion will be filed and granted.

Where is the link between the fix and the price smashes we all see all the time? Sure the charts paint some statistically improbable moves, but where is the proof linking the LBMA to all of this. Where are the witness' allegations confirming that the price fix was set at a point to restrain trade, or that information was leaked in advance, or set at specific price points to front run the market? Just because we see manipulation on a chart does not automatically link that manipulation to the acts of the largest bankers choosing a price twice a day. Remember, buyers and sellers can buy or sell at whatever price they want. It's not like they all got together and restricted supply to increase the price or flooded the market with supply to crush the price. You know, like the bullion banks do all the time by selling naked shorts . . .

Anyhow, using the rationale from the complaint, then under this theory, then maybe I can sue Chevron for antitrust gasoline price manipulation at the pump because two owners of local gas stations have coffee at Starbuck's every day then right after that they set the price of gas at their pumps? See how silly this seems?

Sorry to disappoint, but I was hoping for more.

If anyone has questions, I can go into some more detail in the comments tonight and tomorrow.

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